Question

The following items were taken from the adjusted trial balance of the
Biggler Manufacturing Corporation on 31 December 20X5. Assume an average 20% income tax on all
items (including the divestiture loss). The accounting period ends 31 December. All amounts given are
pre-tax.

Sales revenue $745,200
Rent revenue 2,400
Interest revenue 900
Gain on sale of capital assets 2,000
Distribution expenses 136,000
General and administrative expenses 110,000
Interest expense 1,500
Depreciation and amortization 6,000
Court-ordered divestiture loss 19,000
Cost of goods sold 330,000
Operating loss of discontinued operation to disposal date, before income tax 28,000
Loss on sale of assets of discontinued operation, before income tax 10,000
All items are subject to the same income tax rate.
Required:
1. Prepare a single-step income statement.
2. Prepare a multiple-step income statement.

Answer 1

Single step Income Statement of Biggler manufacturing corporation

Particulars on 31st December 2005

Particulars. Amount

(+) 1.INCOMES:.   

Sales Revenue 745200

Rent Revenue 2400

Interest Revenue. 900

Gain on sale of CA. 2000

(-) 2.EXPENSES:

Distribution expenses. 136000

G & A expenses. 110000

Interest Expenses 1500

Deprecation. 6000

Cost of goods sold. 330000

Court ordered losses. 19000

3.Income before

Discontinued loss. (1-2). 148000

4. Discontinued losses

I) discontinued Operation loss 28000

II) discontinued assets loss. 10000

5. Income before tax (3-4). 110000

6. Tax 20% on (5) 22000

7. Income after Tax (5-6). 88,000